US Airways cash jumps in Q2 in prep for merger

Washington DC
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US Airways increased its cash balances by more than 40% in the second quarter, benefitting by four debt financings that it closed during the period.

Cash, cash equivalents and marketable securities totalled $3.62 billion at the end of June, which was up from $2.53 billion at the end of March. This was on par with its guidance of $3.6 billion of cash and securities earlier in July.

Cash was up 43% compared to June 2012.

Derek Kerr, chief financial officer of Tempe, Arizona-based US Airways, described the level as the "highest total quarterly cash balance in company history", during an earnings call on 24 July.

The carrier raised about $870 million in net additional cash from four debt transactions during the quarter. These include the $100 million C tranche on its 2012-2 EETC issued in June, $1.6 billion secured term loan in May, $500 million unsecured 6.125% senior notes in May and $820 million 2013-1 EETC in April.

The majority of the new debt was used to refinance existing debt.

"Number one, [the debt] is to have a big enough cash balance to get through everything we need to do in the merger, and two, after that point, we will start working on paying off some debt as we move forward," says Kerr.

US Airways plans to merge with American Airlines by the end of the third quarter, subject to US Department of Justice (DOJ) approval.

Long-term debt and capital leases less current maturities also rose 64% to $5.38 billion during the quarter, as a result of the deals. Debt was up 33.5% compared to June 2012.

Kerr says that US Airways paid down $98 million in debt excluding the refinancings.

Capital expenditure was $78 million during the quarter, including $55 million in non-aircraft and $23 million in aircraft related expenditures.

US Airways took delivery of four Airbus A321s and two Airbus A330-200s during the period.